How To Destroy Debt Like It’s Your Job – Part 2

Welcome back to Part 2 of How To Destroy Debt Like It’s Your Job. In case you missed Part 1 of Destroying Your Debt, we talked about finding out about all of your debt and investigating why you got into debt in the first place. Now that you have those answers, we can move on to the next step in destroying your debt.

Two Main Methods of Destroying Debt

Today it seems there are two popular ways to tear your debt to pieces. The first method is called the Debt Snowball and the second method is called the Debt Avalanche. Why they both involve snow is beyond me but I guess the metaphor does work. I think there are more creative names you could come up with, but we’re not here to debate the names of the methods.

The Debt Snowball

The Debt Snowball is often considered the best way to pay off debt from a psychological standpoint. The logical people will try to dissuade you from using this method because you’ll pay a bit more using this method than if you used the Debt Avalanche, but you need to do what works best for you. So what is the Debt Snowball?

When you use the Debt Snowball method to destroy your debt, you need to arrange your loans by the balance owed on them from smallest balance to largest balance. Why? You’ll find out!

You’ll need to make the minimum payment on all of your debt payments. The key is what you do with all of the extra money you’ll be putting toward your debt to destroy it. The point of the Debt Snowball is to take all of that extra money (your Snowball) and put it toward paying off the loan with the smallest balance. This will result in you paying off one small piece very quickly and that will put a big win in your column.

It should also give you some great momentum to knock out your next smallest piece of debt. Now that your first piece of debt is paid off, you’ll continue putting all of the extra money toward your next smallest loan balance ALONG WITH the minimum payment from the debt you already paid off. This will increase the size of your snowball and allow you to pay off your next loan quicker!

The Debt Avalanche

As you might have figured out, the Debt Snowball is not the most financially ideal way to pay off debt. By paying off the smallest balance first, you won’t be paying any attention to interest rates which determines how fast your debt grows.

The Debt Avalanche fixes this problem by using your extra payments to pay off the highest interest rate loan first. It may take you longer to pay off your first loan, but you’ll be minimizing the interest payments on your debt as you pay it off and saving a bit of money in the process. This method generally works out better for logical people who don’t need the emotional early wins of the Debt Snowball method.

Your Debt Avalanche will get larger as you pay off each loan. Simply take the minimum payments of each loan you pay off and roll it into your next highest interest rate debt payment, just like the Debt Snowball.

The Key Debt Destruction

The key is to get your debt paid off. You can use either method, the Debt Snowball or the Debt Avalanche. Don’t like playing with snow? Call it something else, I don’t care. Pick whichever works for you. If neither of these methods work for you, make your own method! Just get that debt paid off. 

Which debt payoff method do you prefer? I personally pick the Debt Avalanche method. Are you still paying off debt? We are!

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About Lance Cothern

Lance Cothern, a Certified Public Accountant (CPA) licensed in the Commonwealth of Virginia, is the founder of Money Manifesto. You can read more about him here or connect with him on Facebook, Twitter, Google+ or Pinterest.


  1. Reducing debt is like losing weight, we want results fast! I think it is always best to attack the highest interest first. The more you can pay down the quicker you can results.

  2. Stephen says:

    Still paying off the house, two years to go if all goes well. You know how life is!

    I generally tackle debt with a different priority: Its relation to reducing the total of all monthly expenses, not just debt. A reduction in expenses sooner than later gets the priority. For instance, I spent $1200 insulating my house rather than putting it in the mortgage or car loan. Doing so offered an almost immediate and significant reduction in expenses, and it pays for itself quickly. Likewise, I paid off my car loan before my mortgage even though the mortgage is 5% instead of the car’s 2.9% because I could get the car payment out of my budget much sooner than the mortgage.

    The same priority is even reflected in the loans themselves. I took a 30 year mortgage and a 72 month car loan, both at more costly rates than their shorter term counterparts so they had low payments. I had no intention of keeping the loans that long, but the low payments were there if I needed them. The car was paid in a little over a year, the mortgage should be paid in 4 years of origination.

    I don’t argue it to be the best approach, it’s just what is right for me. Having less due equates to less stress for me. My savings are going to stretch that much farther should the need arise. How many single parents could lose their job tomorrow and still pay their bills and feed their children on nothing but unemployment, and not touch their savings? I could!

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